Latest Japanese Supply Chain Disruption Summary

By now the only homo sapiens in the world who don't realize that the Japanese earthquake/tsunami/nuclear disaster will have profound implications on supply chains, inventory levels, profit margins, corporate bottom lines and broad economic output are Wall Street sell side analysts, who remain convinced that the Lemming view is the right one, at least until management teams start coming out, most likely in the upcoming week, and issuing profit warnings, conveniently blaming their declining profitability on Japan, the weather and other "one time items." In fact, in the old tried and true mentality of "he who defects first, loses the least" and the even trieder and truer mentality of "never let a crisis go to waste" we may suddenly see a scramble of management teams taking advantage of the economic adversity posed by Japan to buffer their own declining margins, therefore buying them at least a quarter before the market realizes that the entire QE2 inspired "golden age" is now over. After all, one would be stupid not to blame an event which most will perceive as non-recurring, thereby eliminating its follow through to the top and the bottom line in future quarters and minimizing the impact on the stock price. So while corporate treasurers and CFOs are wording their press releases appropriately, which we expect will start hitting the tape as soon as tomorrow, here is the most recent recap of known auto and electronic-maker disruptions as reported by Reuters.

Following is a roundup of the impact of this
month's devastating earthquake and tsunami on Japanese manufacturers of
cars and electronics.

Plant shutdowns in Japan threaten supplies to manufacturers across the globe of items from semiconductors to car parts.

Japanese companies are not only reeling from damage to factories and
suppliers in quake-hit northeastern Japan but are also suffering from
fuel shortages nationwide and power outages in the Tokyo area that are
affecting production, distribution and the ability of staff to get to
work.

AUTO MAKERS

* Toyota Motor Corphalted most operations at 18 factories that assemble Toyota and Lexus
vehicles in Japan. It has restarted production of three hybrid models,
the Prius, Lexus HS250h and CT200h, from March 28 at two factories but
will suspend output for one day this week, on March 30. Toyota is making
car parts at plants near its base in Toyota City, central Japan, for
overseas assembly facilities and for repair parts. Toyota will delay the
launch of the Prius wagon and minivan models in Japan from the original
plan for the end of April.

* Honda Motor Co extended its
production halt in Japan to April 3. On Monday, Honda said a fifth of
its Japan-based Tier 1 suppliers affected by the earthquake would take
more than a week to recover. Honda made 69,170 cars in January in
Japan, accounting for around a quarter of its production. On Thursday
the company said it would resume production of motorcycles and power
products at its Kumamoto plant in Kyushu, southern Japan.

*
Nissan Motor Co resumed vehicle production at all assembly plants in
Japan from Thursday, March 24, while supplies last. It resumed
production of parts for overseas manufacturing and repair parts on March
21. Restoration continues at its damaged Iwaki engine factory in
Tochigi prefecture, north of Tokyo. Nissan made 81,851 cars in January
in Japan, where it manufactures 23 percent of its vehicles. Goldman
Sachs has calculated that one day's lost production costs Nissan about 2
billion yen ($25 million) in profit.

* Mazda Motor Corp said on
Thursday it would suspend production of vehicle repair parts and parts
for overseas production at its Hofu factory in Yamaguchi on March 28,
after having resumed limited operations there earlier this week. Its
Hiroshima factory will continue limited production until further notice,
a spokeswoman said.

* Suzuki Motor Corp will keep car production
halted at its three assembly plants in Japan through March 29, and
resume assembly of commercial trucks and vans at one of those plants for
one shift on March 28 and 29. It will continue operating an engine
factory using parts in its inventory. It has not decided on production
plans for March 30 and beyond.

* Fuji Heavy Industries Co said
all five of the car and parts-related plants for its Subaru-brand
vehicles in Gunma prefecture, north of Tokyo, will be shut at least
until Monday, pushing back a restart that had been due on Tuesday.
Production of vehicle parts to be shipped to overseas manufacturing
plants started on Wednesday and production of vehicle repair parts began
Thursday.

ELECTRONICS MAKERS:

* Sony Corp said
shortages of parts and raw materials would force it to suspend or reduce
production at five plants in central and southern Japan making digital
cameras, camera lenses, flat-screen televisions and other goods. Another
plant may be affected by rolling power blackouts. Six production sites
in northern Japan have been halted since the quake. If shortages
continue, Sony may consider temporarily shifting some production
overseas.

* Toshiba said output was suspended at a factory in
Iwate prefecture making system LSI chips for microprocessors and image
sensors, with no time frame yet for a resumption of output. An assembly
line at a plant making small liquid crystal displays for smartphones and
other devices will be closed for a month to repair damaged machinery.

* Canon said it re-started operations at two plants on Friday, but two
camera plants remained closed and the company was not sure which
factories it would be able to operate next week, amid a shortage of parts.

* Panasonic said some plants in northeast Japan remained closed
including one making optical pick-ups and another assembling cameras and
audio equipment.

* Renesas Electronics, the world's No.5
chipmaker, said production at three of its 22 factories in Japan is
still halted while output at three other assembly plants has been
affected by power outages imposed by utilities unable to meet
electricity demand in the wake of the earthquake.

OTHERS

* Shin-Etsu Chemical, the world's leading maker of silicon wafers,
said its biggest wafer plant remained offline, along with a PVC factory.
The firm has not said when it will restart operations. Some of the
wafers made in Japan are shipped to chip companies overseas. Shin-Etsu
is trying to boost production elsewhere, particularly of 300-mm wafers,
to make up the shortfall.

I think I've got it figured - stagflation is good for equities because prices are rising, but sales are falling, so you have the goods sitting on the shelves making money through the inflationary effect. Cool.

I loved the part at about 8:20 into the first video where he details the order of the evacuation. The whole lot of them have bugged out! but stay calm, don't panic... "We will continue to support our Japanese partners" (just not from this fucking toxic wasteland/island) Don't panic!

first off "thank you zero hedge." everyone else "bought into the bullshit"--only here did you get the real deal. extraordinary. just as important and a significant change in the world of ZH is an understanding of the "saliency" of these matters. the average CNBC or Bloomberg bloke "shrugs his shoulders at the significance of Japan anyways." As all you know of me and now of Zero Hege "that is not either of us." Events halfway around the world have an immediate impact on economies. Don't even get me started on "Libya" though I'd be more than happy to get started on "Dick Tator and his Tator Tots" of course. Great stuff.

We do work for American Fuji Seal here in the US. While I was there last week they said that 3 of their plants in Japan were still down. AFS makes plastic containers and labels for almost every product you've ever seen on a supermarket shelf.

I'm bored. Can't get that car in the color I want and Apple is out of the iPad2. Maybe I'll just watch a lot of TV, buy a ton of iTunes, and maybe watch two or three more movies than normal at the local theater. And afterwards, dinner.

And this is what is important. We all have a car or two, a computer, a flat panel TV, and a camera. But we must continue to consume, or else it all falls down. At some point, it Will, all fall down. Consumer sentiment moving lower I see. Well, we will just give out more free money and the stock market will continue on its upward move.

I am so sick of this phony market. I too would love to see a free market. Might be to old to see that again.

That is exactly what we are trying to do here in Peru. Our bearing supplier in S. Japan has not responded to our emails... Most bearing plants are in southern and central Japan I believe, yet we have heard nothing.

When Japanese (or Korean) alternatives become available, we will be buying BIG. None of this JIT crapola for us. We will spend more on inventory.

Reminds me how the Royal Air Force realized that carpet bombing German cities really didn't do much to effect the Nazi's ability to fight war. They finally broke off from the American strategy of dropping volume over a wide area, and switched to flying small, fast aircraft, which would specifically target ball bearing factories. Doesn't matter what else you have, you can't make machines without ball bearings. I suppose the Japanese are going to keep all components domestically, to make sure they have what they need... but it sucks for their loyal overseas customers.

On a wider point, Japanese industry has been forced to become highly specialized in order to survive currency fluctuations and Chinese piracy, which means in many cases, there are no alternative sources and all it takes is one missing vital component and it won't work.

However, our trusty guardians in the central banks will unleash a tsunami of liquidity to wash any problems away.

Well, I don't have one of those Silent Guitars yet. But somehow I have winded up with 4 Yamahas and I have only been playing less than a few months. I guess I got carried away at the pawn shops. But the 12-string has the prettiest little bird on it.

Aaaaaaggghhhhh! THIS paranoid stupidhead does not know if we can even GET our bearings (Japanese or otherwise). Our Korean suppliers might get dragged into supplying for Toyota or Mitsubishi, if that happens, we aftermarket bearing importers are toast.

Just in time is a balancing act between too fucking much (tfm) and shit out of luck (sol), the longer the chain the more chances for things to fuck up. JIT will turn out to be only good for expensive things you don't really need, say diamonds fer example. not so good for stuff like water or food or gasoline.

This could be positive for warehousing and transport, if folks create a fatter supply chain.

The Koreans are giggling behind the scenes. Hyundai and Kia have already launched massive assaults on The Japanese car industry. They have some very good product, if I may add. Those recalls and yen strength have really opened that door for the Koreans. They aren't looking back either.

Any information as to disruptions in the heavy industrial supply chain? Semi conductors and consumer autos only impact those who what to drive to the apple store and eat an iPad. I would be more concerned about the ability of suppliers to get oil, chemicals, gold and food out of the ground and into the marketplace.